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U.S. Environmental Protection Agency
Office of Inspector General
At a Glance
2005-1-00021
November 15, 2004
Catalyst for Improving the Environment
Why We Did This Audit
We performed this audit in
accordance with the Government
Management Reform Act, which
requires EPA to prepare, and the
Office of Inspector General to
audit, the Agency's financial
statements each year. Our
primary objectives were to
determine whether:
•	EPA's financial statements
were fairly presented in all
material respects.
•	EPA's internal controls over
financial reporting were in
place.
•	EPA management complied
with applicable laws and
regulations.
Background
The requirement for audited
financial statements was enacted
to help bring about improvements
in agencies' financial
management practices, systems,
and controls so that timely,
reliable information is available
for managing Federal programs.
For further information, contact
our Office of Congressional and
Public Liaison at (202) 566-2391.
To view the full report, click on the
following link:
www.epa.aov/oia/reports/2005/
20041115-2005-1 -00021 .pdf
Audit of EPA's Fiscal 2004 and 2003
Financial Statements
EPA Receives Unqualified Opinion
We rendered an unqualified, or clean, opinion on EPA's Consolidated
Financial Statements for fiscal 2004 and 2003, meaning that they were fairly
presented and free of material misstatement.
Internal Control Reportable Conditions Noted
We identified the following reportable conditions:
EPA needs to improve financial management quality assurance.
EPA could not ensure the accuracy of the unearned revenue accounts.
EPA did not timely record accounts receivable.
EPA did not promptly record marketable securities.
Accounting for contractor-held property needs improvement.
Improvement is needed in EPA's accounting for obligations.
Systems development for several systems needs improvement.
System certification and accreditation is needed.
Weaknesses in system's change control procedures were noted.
Automated Application Processing Controls could not be assessed.
Noncompliances With Laws and Regulations Noted
We noted the following noncompliances with laws and regulations, though
none are considered to be substantial noncompliances:
•	EPA needs to continue improvements related to cost accounting.
•	Difficulties in reconciling intragovernmental transactions continue.
•	EPA needs to strengthen security screening for non-Federal personnel.
•	EPA is not in compliance in preparing the Statement of Transactions.
Agency Comments and Office of Inspector General Evaluation
In a memorandum received November 12, 2004, the Agency responded to
our draft report, and generally agreed to take sufficient corrective actions.

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